Cambodia Allows Commercial Banks to Provide Crypto-Related Services for Backed Tokens

The National Bank of Cambodia (NBC) has given commercial banks and payment firms permission to provide crypto-related services, but only for Category 1 crypto assets, which include cryptocurrencies backed by fiat, such as stablecoins like USD Coin (USDC) and USDT (Tether), as well as central bank digital currencies.

Which Cryptocurrencies Are Allowed?

However, this decision does not apply to standalone cryptocurrencies like Bitcoin and Ethereum, which are still prohibited in Cambodia. To provide crypto-related services, commercial banks and payment firms must first receive approval from the central bank. Once authorized, they can convert crypto into fiat currencies and vice versa, facilitate cryptocurrency transfers between accounts, and provide custody services.

Regulations and Prohibitions

However, financial institutions are strictly prohibited from using clients’ crypto assets for their own benefit. This move is a significant step towards embracing the crypto industry in Cambodia, following a global trend seen in countries like Hong Kong, the U.S., and UAE.

Background and Previous Restrictions

Before the NBC declaration, Cambodia had banned its citizens from making crypto transactions or trading cryptocurrencies due to the high volatility posed by virtual assets and the widely held perception that crypto facilitates illicit activities such as money laundering and fraud.

Recent Developments and Future Outlook

Earlier this month, Cambodia blocked 16 major crypto exchanges, including Binance, OKX, and Coinbase, for failing to secure licenses from the country’s Securities and Exchange Regulator. While Cambodia remains cautious of cryptocurrencies, the nation seems to be taking steps towards digital currencies that are pegged to fiat. In May, the National Bank of Cambodia governor Chea Serey expressed optimism that digital currency could strengthen the Cambodian riel and decrease reliance on the U.S. dollar.

Tips for investors:

  • Research and understand the regulations and laws surrounding cryptocurrencies in your country.
  • Only invest in reputable and licensed exchanges and financial institutions.
  • Stay informed about the latest developments and trends in the crypto industry.

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